March 23, 2022

Ep81: Tom Steyer 'An Epiphany Based on Data'

Tom Steyer is Co-Executive Chair of Galvanize Climate Solutions, a mission-driven investment platform.

Tom Steyer founded and ran Farallon Capital Management, a multi-strategy global investment business based in San Francisco, from 1986 until 2012. During that period, it grew assets from $6mm to $36bn. Over the same time, Tom was also a partner and Investment Committee member at Hellman & Friedman, a multi-billion dollar private equity firm.

After retiring from Farallon, Tom dedicated himself to public service and philanthropy, with a focus on climate action. Tom is the Co-Founder of Beneficial State Bank, a triple bottom line community development financial institution founded in 2007 with over $1 billion in assets. Tom is also the Founder of NextGen America, the largest youth voter mobilization organization in American history. Most recently, Tom was a 2020 Democratic presidential candidate and beginning in April 2020 served as co-chair for Governor Newsom’s Business and Jobs Recovery Task Force. He also co-chaired Vice President Biden’s Climate Engagement Advisory Council to help mobilize climate voters.

Tom graduated from Yale and received his MBA from Stanford Graduate School of Business.


Michael Liebreich: Before we start, if you're enjoying these conversations, please make sure that you like or subscribe to Cleaning Up. It really helps other people to find us. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, I'm Michael Liebreich and this is Cleaning Up. My guest today is Tom Steyer. Tom had a 30 year career in finance, including founding and running Farallon Capital, before dedicating himself to the cause of climate action, first in the nonprofit sector, and then throwing his hat in the ring as a contender for the Democratic candidacy in the 2020 US presidential election. Tom is now returning to the world of investing as Executive Co-chair of Galvanize Climate Solutions. Please welcome Tom Steyer to Cleaning Up. Tom, welcome to Cleaning Up. Thanks for joining us.


Tom Steyer: Michael, it's a pleasure to be with you.


ML: Now, the last time we met, it was I believe, the opening day of COP26 in Glasgow, and you, I'd like to say were in my castle, but it wasn't my castle. But it was the castle that I had put together this Climate Action Solution Center with a number of partners and sponsors. And we had that kickoff dinner, which was quite a thing, wasn't it?


TS: Well, it was really fun. I was very excited about Glasgow, I saw some old friends at that dinner, who have been surprisingly involved in some cases. And it was really kind of it was the kickoff to what I think was a very successful conference on itself.


ML: Well, I'm glad you you're the one that said it was successful, because, you know, I have claimed it was successful. Because, you know, I've said that my COP was spent at least until I had to leave because my wife got COVID and I had to come back down to London. But my COP was spent with amazing doers, investors, entrepreneurs, innovators. And so, although the negotiations only got so far, and the activists said it was a disaster, I thought it was a very successful COP.


TS: I completely agree with what you just said. I think that if you look on the nation basis, in terms of the official representations, honestly, I thought there was a huge step forward  from Paris, in the sense that Paris was really focused on the idea of can we keep it to two degrees Celsius. And Glasgow was really focused on a nation level of can we keep it to one and a half degrees Celsius, which whatever you want to think that is a gigantic change, given, you know, how much distance there is between those two things. But the big change is the point you were making, which is this, this was a sea change in terms of private market participation, in terms of the numbers of companies that showed up. And what they showed up with in terms of information, promises, and seriousness, that was the revolution it was I thought this was the handoff, from the from the nations of the world to the private sector, as in we’ll put in the framework, but please get it done.


ML: Yeah, and I think a lot of people, you know, who don't follow this, perhaps as closely as you and I expect these COPs to kind of produce a deal. And that deal should be then what we follow for the next kind of 30 years. And it should go all the way and it's a one off. And of course, you know, it's not, it's a process, isn't it?


TS: I think that, you know, the way that I break it down as somebody who's been, you know, a business person for most of my life, is, you know, there's the strategy section, strategy, setting up what we're going to do, and then there's the execution phase. And always, you know, the saying in Silicon Valley is strategy is easy, execution is hard. You know, it's like, you can say, you're going to fly to the moon on gossamer wings, but you actually have to do it. And the doing of it is really the critical part. And that's where we are, as far as I'm concerned.


ML: Well, I think we're in the doing, I think the critics would say, Okay, well, that's all very nice. But you know, there's doing and there's having done. And, you know, I agree, I think that we're now getting to the point where, you know, the frameworks are getting in place, and the aspirations are there. And that handoff to the private sector is there, but it is still work in progress. And, you know, you and I can be optimistic because we hang out with people who've delivered extraordinary things in their business lives, but you can understand why some people be more skeptical.


TS: Well, of course, but you know, that's the essence of doing things. If you're looking at a football match, and you think you have a great team, you actually have to play the game. You can't sit there and say, look on paper, we already won the game. It's like, oh, that's terrific, but unfortunately you  have to go out on the pitch and actually score goals and win the game. And that's where we are is like, yeah, we know what we have to do. But there's a lot of difference between saying we're going to do it and we are doing it.


ML: Now I have to go back to that dinner and do a little bit of name dropping, just before we get into some other topics that we're starting to open up there. Because for me, that was an iconic moment where we couldn't get the folks in the room to sit down, because there was you and you were talking to, I believe it was Henry Fernandez of MSCI, whom I believe you are a classmate of at Stanford. And then there was also Anne-Marie Trevelyan, the Secretary of State newly appointed for Trade, and Malcolm Turnbull, former Prime Minister of Australia now working closely, of course, with Andrew Forest and Fortescue mining and so on, and we couldn't get you to stop talking you as a group and to sit down and, and have the damn dinner that we, we've got lined up for you.


TS: Well, I especially I know some of those guys a little bit. But I know Henry really well. And you know, he's been a friend of mine now, for 35 or 40 years. And so, you know, he's somebody who I had never really associated with the kind of commitment that he has made to sustainability and climate. And so it was actually really interesting for me to connect with him in that context, and see what he was doing in MSCI and see what he was determined. You know, he's somebody who, I was so proud of them, you know, he's had such a successful business career, but he obviously sees the world much more broadly, and is doing something with his business that is really impactful. I was it was great to see Henry there, actually.


ML: And also, I mean, it's also good business for him, right? Because, you know, he's informing, this is MSCI, all these indices that he's putting together in this analytic base. This is not stupid stuff from a business perspective, either. So, he may have kind of come on the outside of the curve a little bit relative to perhaps, you know, Bloomberg, who bought New Energy Finance, and maybe even you could name some other information providers, but the whole of that industry is now moving pretty quickly in that direction. And he has, you know, assumed a leadership role, no question.


TS: But you know, it's one of those things where it's going to be impossible for us ever to judge other people's motives. And all we can really do, as fellow human beings is see what they do. I mean, one of the funny things to me about talking to Henry that night, was he had worked, you know, he was like, wow, you're going to do this through the private sector, you're going to go back to your roots of being an investor. You know, I thought you'd moved on from that. No, sir. Like, Henry, good grief. I've been doing this for more than 30 years as a professional investor. Since when did you think I lost the concept that actually the private sector drives execution and drives outcomes? Of course, that's true.


ML: Right now, I think we're kind of getting to the nub and the theme of what you know what we're going to be talking about here, because you have, you've looked at you’ve been a huge player in the private investing space. But you've also peeked over the fence, maybe done a little bit more than just peeked over the fence and looked at the policy space. And this question of who leads and who follows I think is a really is a really fascinating one. But what we need to do before we get too stuck in, we need to just back up, because my audience may not know all of the things that you have done and that you are doing right now. And so, I you know, why don't we start with Galvanize Climate Solutions kind of start at the end. What are you doing right now? What was Henry referring to when he said, oh, you're getting back in the saddle and you're going back into the investment world? What are you doing with Galvanize?


TS: I mean, I've started an investment company to invest comprehensively in climate solutions, Galvanized Climate Solutions. And the idea is to have it be you know, not concessionary returns, you know, market returns, making financial investments, but ones, only ones which have significant impact in terms of solving our climate crisis. And you know, that is really marrying what I've done, really, since I was 22 years old and got out of college, which is basically I spent 30 years as a professional investor. And then for eight years, I was an advocate in the United States for a robust climate response from the United States. And during that time, I basically walked away from a couple investment businesses that I'd founded or helped found, and basically spent my time in the policy arena, pushing as hard as I could in as many ways as I could think of, to basically get Americans broadly, to accept that idea of a robust response. And the reason that I feel like Galvanize Climate Solutions, this investment company in climate solutions is the right response is I think we've won the advocacy battle in the United States. You know, we haven't won the political battle. But if you look at the Republican Party, which is the party of people in United States, who are least likely to want a robust climate response 57% so over half of have registered Republicans want the United States to help lead the world to a climate response. 75% of registered Republicans want the United States to move to clean energy, it's kind of like for the people who don't agree. And I can obviously do 100 minus 57 and 100 minus 75, as a percentage of the Republican Party, that's still tens of millions of people. It's like, they've heard the argument now a thousand times, they see the world somehow differently. That's their right. You know, it's a democracy, you get to view the world however you want, and you get to make your decisions however you want. But my point is advocacy of the kind that I bring, you know, logic, objective, economic, scientific, is not the kind of argument that they're predisposed to listen to, which is their right. But that means I don't want to spend more time pushing on something that has really diminishing returns, we are, as I said, in the execution phase. So I really want to take my 30 plus years of being an investment professional, and try and be part of that team of people pushing the ecosystem to actually get things done on the ground with measurable results and measurable returns.


ML: And this is absolutely fascinating, because, you know, I've sometimes phrased it as we kind of need a 65% consensus to embark on this transition. And the reason and you don't need 100, to your point, you don't need 100%, you can't get 100% you don't need it, you can't do it with 51%. Because when times get tough, 1% goes and suddenly you don't have the you don't have the ability to move forwards. So 65%, and you know, this is true of every great, you know, conflict, you kind of need, you know, you don't need everybody to be on side if you're going to embark on some just war, but you do need some, you know, plurality that's meaningful. So that's maybe that's a glossing what you're saying?


TS: Well, it's part of what I'm saying, let me say this, just to put it in an American context, probably about 20% of Americans don't believe in evolution. So, Charles Darwin has, you know, he was around, gosh, 170 years ago. So it's like, we're never getting 100%. But the other thing I believe, beyond the point that you're making about you know, majorities significant majorities is I believe that as we win economically, that will move the political, that in fact, as these businesses become ingrained, significant, substantial job creating, revenuecreating, just built into the fabric of our countries, that that will change the politics, because the politicians will be sitting there looking at the money and looking at the jobs and going like, how am I going to fight that? So, the process itself, I believe, will have a substantial political impact.


ML: And there's no question. We've seen that in the UK, and I'm very proud that I was actually involved in that, you know, we started, you know, well, I started doing this sort of stuff 20 years ago, and, you know, commentating and analyzing and helping investors. And about up to about 10 years ago, or even seven years ago, the pushback from, you know, Conservatives, which is my party, was always they always call it ridiculously expensive renewable energy. And that went until about 2015. And now, you know, you're, we're actually recording this on the day. That was just the mantra, it was always called ridiculously expensive renewable energy. Today, Boris, Boris Johnson, our prime minister has just written a piece in The Telegraph saying, you know, the instability caused by, you know, buying oil from Vladimir Putin, the solution to it is, in large part, the net zero transition and renewable energy, which is cheaper than the alternatives. Now, that journey has definitely happened here. I think it's happening in Australia. And I think it's happening a little bit slower. But I'm hoping that it's also happening in the US and Canada and other places.


TS: I mean, so I live in California. And if you think about what's driven the information technology revolution that's been focused in California really since before the Second World War, what's driven it has been the power, the increasing power of silicon chips. And so in California, most people know, there's this thing called Moore's law, named after the former CEO of Intel, Gordon Moore, who said that basically, the power of a chip will double every year. And then after about 30 years, he said the power of a chip will go up by 50% every year. But what that drove was the ability of an iPhone today to be infinitely more powerful than a computer as big as the room that I that I'm in right now, when I started my career. And so, it's absolutely in the psyche and, you know, spirit of California, that human driven innovation drive down costs relentlessly and drives up capability relentlessly. So, I've always said to people, even when it wasn't true that clean energy was cheaper, I said, look, human beings are smarter than burning rocks. And the minute those lines cross, they cross forever. And the distance gets bigger every instant from then on, we will not lose to burning rocks.


ML:  I'm smiling, I believe the phrase is preach brother, because I have been saying this. You know, this is basically the foundation of New Energy Finance was understanding the experience curve. Moore's law is one instance of that. I've also had on this show, people you I'm sure have come across Ramez Naam, who, you know, very early on spotted exactly that doubling trend and Auke Hoekstra from TU Eindhoven. And we were a little band of brothers that understood this stuff fairly early, and then didn't get listened to by that many people for too long. And then it kind of flipped around 2015.


TS: Well, you know, in 2015, coincidentally, Michael, I was talking to somebody in the Obama White House. And we were talking about the relative costs of wind, solar, natural gas, you know, in terms of electricity generation. And I said, well, in your projections as you're doing policy, what kind of reduction do you have in the cost per kilowatt hour of solar and wind? And the guy goes, well, we keep them flat. I said, are you kidding? You keep them flat? And he said, Well, we're being conservative. Because just to be clear, that is not conservative. Now, that is unrealistic. That human you know… there is a specific relationship between the doubling of solar installation, and the cost reduction would I think, is a 22% reduction for every doubling, something like that. But my point is, the idea that there would be no reduction in cost in solar was like saying, we think there's a 50% chance the sun rises tomorrow. So, we're going to go like 50% does 50% it doesn't, it's like, okay, that's ridiculous.


ML: That's right. There's a whole genre out there on the internet of mocking the forecasts of the Energy Information Administration in the US the EIA. Oh, yeah, there's a huge, you know, because they're these conservative forecasts. And by the way, the IPCC scenarios, you know, the famous scenarios that that we're supposed to be using to underpin all of this, the ones that get quoted most often are scenarios where the coal industry grows by a factor of 10. Because solar and wind don't get cheaper, and they don't work and, and actually transport amazingly enough, that goes to coal to liquids, because renewables don't work, batteries are too expensive, and there's lots of coal. So these scenarios are still built on the biggest load of nonsense, frankly. And that's a huge problem. Because we don't have a roadmap for the space we're actually going, which is, in my view, and I think in your view, success, I mean, we are bending that curve. We're not going off to Armageddon.


TS: I had a conversation, I think, around 2010, or 2011, with an American who was running one of the 25 biggest companies in the country. And you know, he was a classic looking, large, you know, distinguished looking American gentleman in his sort of, I'd say, mid 60s. And he obviously didn't agree with me. So he was politely trying to show me that I didn't know what I was talking about. And so he said, you know, Tom, if you look at that pie chart of energy generation, you know, showing this much coal, this much natural gas, wind, blah, blah, blah, blah, how do you think will change over the next 30 years? And I gave him, you know, what I thought was a pretty stock, not particularly thoughtful answer, you know, wind and solar will grow dramatically, coal will basically go away, the hydro will stay the same. Nuclear will probably go down as, as plants get decommissioned and natural gas is the real question. He goes, okay, that's interesting. I would bet you that no slice of that pie will move by 1% over the next 30 years. And this is someone running one of the biggest companies in the country. I said, you know, that's really interesting. You could be right, but if you are, we are all dead. And I'm going to bet that we're not dumb enough to die willfully.


ML: So that I've had hundreds of those discussions. I'm sure that wasn't the only one that you've had. I mean, it's a, you know, what's fascinating about that is I always kind of jump in at the level of that pie chart. Because the problem with that pie chart is it's based on primary energy, of which two thirds is wasted, because it's thermal waste from coal, from gas, and from oil and transportation and a little bit from nuclear as well. And so the whole pie chart discussion is wrong, because you can get rid of two thirds. I mean, if we did this right, we wouldn't have those losses. And then the whole problem becomes much more tractable. Having said that, we are now at just for the record, we're at 14%, wind and solar electricity in the world up from, you know, zero from a standing start 20 years ago, which is fantastic. But of course, electricity is only 20% of energy. So, you know, we can celebrate the 14% and say, we're doing great, we can also look at, you know, the whole, the whole, you know, the pie of energy use, not primary energy, but energy use and say, well, we're still only at about 3% or 4%. And we got a lot, a lot further still to go.


TS: Michael, but I was checking before talking to you today, just to see, you know, obviously, the big question is total emissions. And if you look at total emissions, I think for the last 200 years, there has been one year of down emissions, which was 2020, which was actually due to COVID. And if you look at 2021, I was just checking, you know, the estimates were that it was higher than in 2019, which was the previous high, and it was higher. So when you look at all of the measures of success, that people like to point to, of which there are some substantial things that have been accomplished, and which, you know, actually are steps forward, overall. So far, the only year where emissions have gone down was due to COVID. And we're actually last year was the highest step. So we are definitely in a position of, we have to make a substantial systems change, that we have to think about this in my mind in a different way for us to actually win this battle to reduce emissions and to actually get our natural world back into a healthy place.


ML: I guess I'm less, you know, that that's that, we're sort of flipping between you being bullish, and me being bullish, and me being pessimistic. So it's great. It's a little dance going on here. Because actually, that that curve of emissions, you know, I'm looking at it and going well, it's hardly gone up, it's gone up by only about 2%, since 2013. So although it has, you know, did go down, and then it bounced back, and so on, actually, since 2013, we've seen 25% 26% economic growth and only 2% growth in emission. So we have succeeded in flattening that curve. And I think, you know, taking out the annual bouncing around, we flattened but then I come back to your point, which is we got to do a whole lot more and very systematic, because the goal is not flat emissions, the goal is zero emissions, otherwise, we are all...


TS: the other question here is about urgency. You know, there is about where we have to get. But, you know, getting it is a long time from now doesn't work. You know, this is a problem, which is cumulative. And so every year that we don't succeed, is not like, oh, no, we need to do better next year, that makes the mountain higher to climb. You know, and so it makes the problem more intractable. Having said that, look, I know we can do this. I just what I was arguing for when I was saying a systematic change was really the way we think about this. But in fact, we need a new way of thinking about how we're in fact going to drive down these emissions overall, what are the mechanisms we're going to, we're going to use, how we're going to think about what true innovation looks like, in this context. So that in fact, we make, that's what I'm talking about.


ML: Okay, now, I was, I was going to ask you, I was going to just back up a little bit and ask, When did you first start focusing on this problem? Because you've had this very interesting kind of, you know, what we're seeing is, okay, you invested, and then you did policy, and now you're investing again, what was the first trigger, and then I want to come back to those mechanisms that you see. But first, I really want to get into your head, as you were coming out of the hedge fund that you created very successfully. And you devoted yourself those eight years, what was your thinking? As you know, did you have an epiphany? Was it your kids? What was it that kind of said, come on, Tom, this is what you've got to, you've got to have a change here.


TS: So unfortunately, this is going to mean I may have to talk a little bit about myself. So, I'm going to apologize in advance for doing so. I come from a family of people who have for a couple of generations been really interested in the wild parts of America, in going back and exploring them and living in them and really trying to see what the natural world looks like in its most pristine state. And that is something that I was always really interested in too, so that the summer jobs I took during college reflected a desire to get back to what I would think of is early America. I worked as a ranch hand, I picked fruit. I went to Alaska. I went to the remotest parts of America to try and see what it looked like before all those bloody people from England came over here. Just kidding. But I really did want to see what it looked like before Europeans showed up. And so I wanted my kids in 2005, I took my family to Alaska, where I'd worked for a summer to try and show them the most unspoiled land left in the 50 American states, the most remote part with the most fecund animals. And you know that this is what it looked like, you know, when there were many, many fewer people living here, and living a much less urban life. And so we go back, and we go into the woods. And basically, what you can see is it’s just melting. You know, we went to places where there had been a valley like this, but it's totally filled with snow, so that you couldn't look from one side of the valley to the other, because there's just a huge mountain of snow and ice. Gone. And you could just see the water, these glaciers melting, where it looked like they put a huge tap into this glacier and the waters just streaming of it. Just constantly, it was like, oh, my God. So this is global warming, right here physically in this place that I been, and sort of had in my head, what this looked like in 19, you know, 1981, was like, Oh, my God. Oh, my God. So I came back. And we were talking as a family around the dining table, you know, what are we going to, in 100 years, when people look at us? What are they going to say? Like, those people were so dumb? How could they have missed that? And we're like, wow, they were completely out of touch with the natural world. They totally missed it. Like they were watching it disappear in front of their eyes. And somehow they had their eyes shut. And so we're like, okay, and I started to get involved in a bunch of ways. In around 2006 2007, saying, Okay, is it research? Should we fund research, to like, be smarter about the technology? Should we fund business groups, to like, go, we need to push, you know, clean tech harder, this is the future, blah, blah, blah, let's make this a nonpartisan business effort. I did one of those with Hank Paulson and Mike Bloomberg, you know, rigorously pushed to support clean, on a bipartisan level or nonpartisan level clean energy legislation. And I basically got to a point in 2012, where it's like, okay, this has gotten to a point that seems to me to be a crisis, there doesn't seem to be an adequate response, I can afford to do this. It seems important. I can be one of the people who's trying to forge a new consensus in the United States, which is what I said <inaudible>. And so it was really, it, you know, it was the physical evidence of seeing, oh, my God, this is like, not a question. It's not a close call. It's not like, if, maybe, I need to see more data. It was like, oh, my God, no doubt, absolutely. No doubt, this is happening on a level that's like, you might as well just have someone walk up and punch in the face.


ML: So it was it was an epiphany with data, in a sense, because it was your data, your eyes.


TS: Yeah, it was. And, you know, it's also but the other thing that's true, Michael, is, which I guess I started by saying, I had spent a lot of time in the wild. And I had a certain reverence for that, you know, as from a family perspective, you know, of people who really wanted to do that for, you know, for generations. And I felt like, so I came to it with a sense that, like, if we’re ruinous, we're going to ruin something incredibly valuable. And I think, since then, so that was 17 years ago, what I've really seen is that every explanation of why this is a problem is inadequate, you know, even talking about, you know, Galvanize Climate Solutions, okay. Yes, that's absolutely critical. Yes, I'm committed to it. But I'm also aware that as we endanger our climate, there's so many other connected issues about extinction. And, you know, just basically the health of the planet to support us, to support the health and safety and prosperity of human beings. It's, you know, there's no way to limit it to any one thing and in fact, you need to make sure you're looking at it in a pretty holistic way.


ML: Now, and in some ways that experience, I've had probably broken up into a few chunks because I was a skier. And so I was a skier, I was I had my moments. Yeah. You know, but I spent a lot of time in glaciers and then I was a climber and I saw some of this stuff. Like, you know, it is it is the data of your eyes that is that is really kind of and falling on fertile ground and actually caring fundamentally about this stuff. But that's so now let's go back to those. Okay, so you got into the public policy sphere increasingly. So you did a nonprofit, but then you got to the point where you yourself stood. Those mechanisms. Let's come back to what are the systemic changes that you think we need to effect? And is that you know, is that just going to be a reprise of your, you know, sort of presidential platform? Or do you now see it differently?


TS: Well, you know, I think this is a, we will succeed in this from an ecosystem basis. And I, that seems pretty soft, and, you know, <inaudible> like to me as well. So let me just define what I mean like this. It's not like we're going to solve this in some boardrooms, it's not getting solved behind closed doors, as a society, as a globe, we will decide to solve this or not. And so, it's going to be people everywhere are going to have to understand, okay, this is one of the things we need to do, for sure. And it's important. And, you know, in California, that's something which people broadly understand, because they're worried their house will burn down. They're not thinking of this, as you know, oh, this is some theoretical thing that I learned about in 11th grade. And, you know, I got an A minus by writing a paper on global warming. This is “my house may burn down”. You know, they get it, it's a personal thing. The other thing that's true is that there are accompanying pollutions with the carbon emissions that cause global warming. And those accompanying pollutions included air pollution and water pollution. So there are a lot of people who are associating Saul, associating solving global warming, with ending air pollution that gives their kids asthma. And I think that one of the things that's really important about solving this whole, you know, climate crisis, is to go back to first principles, which is it's really about preventing unimaginable human suffering. That's actually what we're trying to avoid. Unimaginable human suffering on a scale we've never seen. And when we're trying to do that, it's also really important, remember, that we can ignore current human suffering that's associated with it. And so when you when I think about this, but I also think when other people think about this, it's really important to be aware of the human beings, that this is a human issue at its heart. It requires human involvement, human inclusion, human leadership, from places that are not necessarily the scientific centers of thought, but are the centres of important knowledge about how it affects human beings. And it's impossible to think we'll solve this without taking into consideration the justice questions within societies, the environmental justice, or between the global north and the global south. The idea that those are peripheral issues or issues to be solved, after we deal with the science, in my mind is a grave mistake. You know, those are central issues, to coming up with solutions that work in the real world.


ML: Right. And I completely agree, I completely buy that, and the just transition, you know, I've been involved with Sustainable Energy for All for, you know, over a decade. And that's been very, you know, very core part of how I see the solution set and the transition. What I would, you know, press you on is, how do you see the role of energy prices in this, in that just transition? Because, you know, we're at a time, certainly in Europe, but I think also in US, where, you know, energy prices, gas prices are spiking, this is causing also real human suffering, and it's causing it right now. A transition, which is just, you know, you can't have this pipeline, you can't have coal, you can't have gas, you can't have oil, and then we'll let the market figure out what you can have in a decade, in five years or 20 years. To me, that feels unjust, because you and I don't care how much a gallon of gas costs. But for some people, that's an existential problem.


TS: Oh, it's a huge issue. That's all people talk about in the States right now, is the cost of gasoline. So I actually think, I mean, good grief, energy is a commodity. Nobody knows what's making their lights turn on. When you turn your lights on. You don't know if it is coal generated, hydro generated, solar generated, you just want your lights to turn on. It's just cost impact. So, it's absolutely critical from a human standpoint. I mean, in the United States, this is a huge tax. We view it as a huge tax on Americans going to you know, energy producers, which in the United States often is Americans, but in large parts of Europe is not their home country. So, it's a tax to foreigners, you know, worse. So but so let's take a step back.


ML: Let me just point, Tom, we must point out today we're recording this on day 20 of the attack… on the war on Ukraine, as we right now in the UK, but even more in Germany, are pouring far more money into Putin's coffers than we're providing to Ukraine in aid.


TS: Absolutely. So, let's just talk about this in the historical sense, and then what we should do about it now. You know, this reminds me of the old saying, you know, when is it best to plant a tree? What day, the best day was 20 years ago, but the next best day is today? So yeah, energy independence not being dependent on foreign oil, you know, oil and gas? Yes. I mean, if you look around the world, there's a high percentage of people who are producing oil and gas, who are not friends of the free world, you can just do the math, you can just take a look who the big oil and gas producers are around the world. We have the ability now to generate electricity, to generate energy, to generate home heating, from places that are not fossil fuels at better prices. But we can't do it overnight. So should have we been doing it for the last five to 10 years? Yeah, absolutely. But you know what, we didn't plant the tree 20 years ago. So, we have to deal with the tree for the next five years. But then we have to deal with the tree going forward. So, I understand that it's important in the short run, that to the extent we have fossil fuels, we should move up the production to try and keep cost down. I don't want to be too wonky about this, but the price of oil is very inelastic, you have a little too much, and the price goes down a lot, you have a little too little and the price goes up a lot. People need to get to work. So therefore they need to put gasoline in their car. So, therefore, it doesn't there's not much gear in terms of how much gasoline is needed. It takes a while to develop solar and wind, you have to build things it takes a while to build batteries, you have to build things. Yes, we need to get off, the answer is not more long term oil and gas. The answer is less long-term oil and gas, we need to deal in the short one, with producing more to bring those prices down. But we do not need to invest long run in more oil and gas. We are now at the point where Moore's Law is on our side, we can beat burning rocks, it is an absolute mistake in my mind to build 40-year infrastructure to support oil and gas that we do not want to be dependent on. So, it's really a question about thinking long term and short term at the same time, and not confusing them. This is our, you know, fifth wakeup call that says “stop it”. You know, this is a time for us to go for cheaper energy and independence. And they're both within our grasp. But we have to make the decision. And this is just not hard, from an investment standpoint, this just isn't hard, executing it and making specific decisions to try and control this. Okay, it's going to be complicated and difficult. But the strategy of what to do here is extremely clear.


ML: And this is very different from all of the above because of one thing that you said, which is it may well be in the short term, all of the above because of the price spikes and the inelasticity. But it's very different in what you said is, you know, the short term, the long term and don't be confused. In other words, we may, we may invest in some oil and gas in the short term to help us deal with Mr. Putin and other issues. But that's a short-term thing, not to distract us from the long term thing.


TS: Look, the problem with 40 year infrastructure. The people who build it, the scream and yell, I don't care what they, once it's built, they want to get paid for. They want to get paid for it for 40 years, or 60 years, or every single second they can get paid for. And if it's dependent on fossil fuels, that means they got to have fossil fuels. And it's kind of like the world can burn but they want to get paid.


ML: But let me challenge on one thing, though, that there was Alain Ebobissé  who's the CEO of something called Africa 50. It's an infrastructure provider in Africa. And I talked to him on this show before COP26. And I asked him what he wanted to have out of COP26. And he said a few things. But then he said, and one thing he said, what I would love is for the world to figure out how to allow Africa to invest in its gas. Basically, I now I'm paraphrasing you in Europe or keeping the lights on with gas, right, and you're building a load of renewables. But you've also got the gas, you've already got the incumbent, you know, you've already got the gas peakers. And the supply. In Africa we don't. So you want us to do a whole lot of wind and solar, but without the thing that turns that into dispatchable power. And he's not talking 20 years, he's talking pretty much, you know, he's talking now, does he have a case? Does he have a point or not?


TS: Let's I agree with part of what he's saying I disagree heartily with part of what he's saying. So let's just start with the basic point about climate, the people who have caused the least amount of harm will suffer the most. It's consistent in this world. And if you look at the continent of Africa, without breaking it down to specifically by country or region, it's a place which has contributed very, very little to greenhouse gas emissions, where people have much less energy use per capita, and where they would like to catch up with the rest of the world and lead a lifestyle that includes a lot more energy use per capita. Okay, that's true. And his point is, why are we being punished? Because we haven't contributed to the problem. You're saying to us from your position of prosperity. We know, it's really important for all of us that you stay poor. How is that fair? Check. Good point. Now, here's what I would say in return. So he's then saying, and therefore it's important for us to use the destructive old technologies of the past to be more like you. It's like, why, why don't you leapfrog us? Why don't we sit here, and it's going to be critical, as the electricity generation in Africa, in Southeast Asia, you know, specifically in India, in big parts of Latin America grows a lot per capita that it’d be clean. And the idea that we need to use the dispatchable old natural gas technologies is a huge mistake. In fact, what we really need to do is make sure that as we build that electricity generation, we do it from clean sources, and that we use battery technology. Because long term, this idea of you guys are suffering right now, from your gas fixation. And, you know, I'm not saying that's not only because it's you started by saying it is hurting people, it is a gigantic tax on people to heat their homes, and they're sending it directly to somebody who has proved himself to be, you know, quite a rotten person, quite a rotten actor. And that's but if you look around the world, their desire to catch up, I completely understand and support. It's just going to be really important for the world, that the world get together and use our collective technology, our collective finance and our collective capability to make sure that the people who are rightfully wanting to catch on an income level, do it in a way that's not destructive for all of us. Thank you very much. It's really nice to talk to you. I hope I'll see you in London soon.


ML: Very good. You're welcome here anytime. So that was Tom Steyer, Co-Executive Chair of Galvanize Climate Solutions, and 2020 US presidential candidate. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation.